101 management schools apply to shut shop as business is bad

Battling vacant seats and a dip in campus placements, more than 100 business schools offering MBA degrees and postgraduate diplomas in business administration applied for closure in 2017-18, according to officials familiar with the development.

Data with the All India Council for Technical Education (AICTE), the apex body of technical and management institutes, shows that a total of 101 management institutes wrote to it seeking voluntary closure. The largest number of them were from Uttar Pradesh (37), followed by 10 each from Karnataka and Maharashtra. Most of these requests are likely to be accepted, the officials said. In 2016-17, 76 management institutes closed down and in 2015-16, 66 did, according data provided by AICTE. Both were not-so-good years for the Indian economy.

“There is a reduction in demand for some of the specialisations, especially marketing. There is also an increase in number of deemed and state private universities,” said a senior AICTE official.

“At the same time, some institutes are unable to fulfil the norms and standards set by regulators with the revenue generated through fee structures prescribed by state governments,” added the official who asked not to be named.

If all 101 institutes are allowed to close, roughly 10,000 seats could be extinguished. Apart from these, certain institutions have applied for closure of their management courses, which could affect another 11,000 seats. There are over 3,000 management institutes recognised by AICTE offering MBA and postgraduate diploma courses across the country.

In 2017, job offers for fresh management graduates in India hit a five-year low, according to AICTE. In 2016-17, just 47% of nearly 150,000 MBA graduates managed to get campus placements — a dip of 4 percentage points over the previous year. The drop in placements for postgraduate diploma holders was 12 percentage points.

R Subrahmanyam, the secretary (higher education) in the Human Resource Development (HRD) ministry said the government did not see the closure of management institutes as a problem. “We want to emphasize on good quality education and not just focus on numbers. It is good if substandard institutions are voluntarily shutting down. At the same time, we have taken several steps to improve quality such as mentorship for accreditation, curriculum reform, teacher training, induction programme for students and industry association among others,” he said.

Management studies in India were largely restricted to the Indian Institutes of Managements (IIMs) and some top private institutes a decade back. The demand for management graduates soared as the economy grew, leading to a spurt in new private and government-backed institutes. But in the absence of competent faculty and industry training facilities, experts say most B-schools began churning out graduates who were far from being job-ready.

“There is a serious problem with placements across various streams, and management too is affected,” said SS Mantha, former AICTE chairman.

“The employment scene across the disciplines has undergone a subtle change. For instance, entry level jobs are being boxed out due to AI and automation. At the same time, jobs that require higher-order skills are created but are small in number. Hence the supply demand equation is skewed. So naturally institutes that are unable to sustain will close down,” he added.